Corp. Travel Rebound Contributes To Record Amex Quarter

American Express yesterday announced net income of $896 million for the fourth quarter-a 17 percent jump from one year ago-as net income for the full year spiked 15 percent to $3.4 billion. The travel giant's earnings reflect a rebound in corporate travel spending and passenger volumes in the fourth quarter.

American Express's Travel Related Services sector, which includes both its card and agency business, contributed to the company's record net income with its own 20 percent rise last quarter. On the travel side, U.S. airline-related volume rose 3 percent, yet "transaction volume growth was suppressed by a lower average airline charge," the company said in its earning report. Meanwhile, worldwide air volumes increased 11 percent.

While consumer spending surged with the holidays and gave an 18 percent lift to Amex's non-T&E volumes last quarter, T&E charge card volumes also felt a boost, rising 9 percent.

The growth in T&E charge card spending follows modest growth in 2003, which followed two years of flat volumes for the company. American Express said both overall cards in force as well as spending per card had grown in the past year.

Two milestones represented Amex's new strategy for the card business last quarter. In addition to officially launching a card with consumer card company MBNA, Amex added Citibank to its U.S. network business.

Amex CFO Gary Crittenden told the investment community yesterday in a conference call that Citibank-issued cards should be available toward the end of this year.

"Citi is likely to deliver excellent results," he said. "You can't turn a high quality product on over night."

Still in its infancy, the MBNA partnership has yielded strong results, Crittenden said, yet the company would not disclose numbers on new business attributed to the partnership.

In the meantime, Amex continues to court other partners. "We would like to target smaller and regional players," Crittenden said. "What appears to be a very successful start of the MBNA program may encourage more issuers to talk to us."

Yet, Chenault earlier this month told BTN via e-mail that Amex will focus on the consumer market through its partnerships with U.S. banks.

"The U.S. banks see tremendous opportunity in partnering with us to issue cards on the American Express global network, particularly as they target high-spending, loyal customers," he said.

Chenault said new U.S. issuers would make Amex more relevant to merchants that do not yet accept the card and result in an acceptance boost for corporate cardholders.